Process Reengineering and Process Transformation seem to be the new popular catch phrases for business these days. We continue to evolve and place more emphasis on the “process”. We like to define them, and map them, and engineer them, and reengineer them, and transform them. We even now have global “Process Owners”. The goal of all this additional and incremental work that is being applied to the process is to make the process more efficient. I understand the almost obsessive approach to processes that businesses are exhibiting these days. I am just not quite sure yet whether or not I agree with it. This approach seems to be consistent with the idea that the most efficient process to build a staircase is to gather a number of previously defined and constructed steps and start to assemble them until you reach your goal, whether it is the second floor of a house or the top floor of a high rise building. To me the simple definition of a process is a way to get something done. We used to want to standardize the way we got things done in order to be as efficient as possible. This was particularly effective when we were primarily a manufacturing / production oriented economy. We have continued to change from a production based economy to a product / services / knowledge based economy for quite some time as the production function has been moved to lower cost environments. We are now trying to standardize the process – the way we get things done – for this new service / knowledge based business environment in much the same way we did for the manufacturing and production based structure. The new catch phrase for standardizing Service and Knowledge based processes is to “Industrialize” them. Here is where I think we may start to run into trouble with this industrialization approach to processes. For quite a while we have strived for a diverse workforce. This diversity is a very good thing. Different people think differently. The diversity of thought and approach that results from having a diverse workforce helps prevent the group think phenomenon from happening, where similar people all see things the same way. If everyone saw and did things the same way there would never be any way to improve the process because everyone would see it the same way. So now we are looking at trying to industrialize a process in order to make it more efficient, which if we are fully successful at will make it difficult to ever modify or improve in the future because we will all be doing it the same way. To go back to our steps and staircase example, if you are going to standardize on only one set of steps, you will only be able to make one type of staircase. A further complication to the industrialization drive occurs when we look at the variations in service and knowledge that are to be applied either internally to the business, or externally to the customer. Manufacturing efficiency was driven based on a relatively few sets of variations to the end product. You used to be able to custom order your car with the specific sets of options that you wanted. Can you do that anymore? The last time I looked most car models came in approximately three option package variations: Standard, Enhanced and Luxury versions. Because the knowledge and service needs of each specific customer will be unique to that specific customer, it may be difficult to fully industrialize the process of satisfying their wants and needs. I have always been a goal driven individual, even when it comes to the processes that I must use. I have found that if I know the goal, I can begin the process of decomposing it into sub-goals or milestones and from there into logical tasks and steps. You can use this approach differently for different goals and that will result in a somewhat different process, and in different tasks. If we have a goal and know what we need to get done, then we can work backwards from it to break it down into the steps that need to be taken to achieve it. This method of work definition provides a general framework or process to work from, but also enables individuals to see and do things somewhat differently in the pursuit of the goal. As long as there are guidelines that are known (example: Bank robbery is not an acceptable solution to increasing the profitability of a customer engagement….) and responsibilities and ownerships (approval levels, etc.) are defined this generic process of working backwards from the end goal can provide a flexible framework that will enable the multiple variations of deliverables that customers require, while also enabling the business to efficiently and effectively adapt to each customer engagement. The current push to industrialize and define each step of a process can be very useful if all you are going to do is provide straight staircases. This approach will work very well if all every customer wanted was a straight staircase. It starts to have real problems when you try to apply it to circular, elliptical and spiral staircases. These types of customer engagements while having the potential to utilize some industializable aspects of the process normally need to be customized to each specific engagement. The final ingredient to a successful process is ultimately going to be the people using. We need to work at creating the ability within our people to recognize and adapt to each new engagement, to build the appropriate stairs and staircases that our customers want and our businesses need, instead of trying to industrialize a process to the point where all they can do is to try an assemble a predefined set of steps, in the hopes that it will more efficiently meet each new set of business and customer needs.
Category Archives: Goals
Free Time
What do you do with your free time? I don’t mean play golf, or spend time with the family. I mean your free time in the office. I know we are all busy and that the demands that have been placed on us require more and more of our focus, but we all have some free time. What do you do when you get off the call, or finish the meeting and don’t have anything scheduled on your daily calendar?
Some surveys suggest that one of the main things we do is go check our email. Not our business / professional email, our personal email. Other surveys also suggest that we go and surf the web to help us “decompress”. Do you leave your office to search out someone / a friend for a little social discussion and activity?
The world, not just the market continues to get more competitive. There are many qualified and talented individuals in many disciplines in the work environment. How can you start to set yourself apart?
The approach that I am taking for myself and my team is to try and re-vector my “free time” toward learning, training and certification. I used to look at people who put all sorts of letters and acronyms after their names with a little bemusement. The truth be told, I still do. I think its great to have the training and certification, but I also think that you need to be self confident enough to not have to continuously display it every time you electronically sign a document.
But I do think the idea that it is desirable to have that training, knowledge and certification to back up your capabilities and talents is starting to grow, and has value. Almost every professional discipline now has some sort of training / certification capability. Sales, HR, Engineering, Design, Project Management and many others all seem to have certifications available. Most of the “training” or course work required to get these certifications / pass the tests in most instances can be done without actually having to sign up and take classes. You just have to read, study and learn.
Reading, studying and learning sounds like something most of us can do in our free time. It probably also will provide us more personal value than checking to see how much new spam we have in our personal mailbox. I like the idea of using free time to set yourself apart and at the same time increase your value to your business.
I am a little frustrated with myself that I didn’t figure this out sooner……
No Corporate Goals
With the beginning of the year comes the phrase that
while maybe not striking fear in the heart of a leader, will definitely elicit
a wince, or two. It’s time for annual reviews for the previous year, and the
setting of individual objectives for the New Year. This event normally ranks
right up there with root canal on the fun scale for a leader.
Despite my poking a little fun at how the process mat
be perceived, it is a very important process for the successful business. Set
the goals too low and you bog the business down because goals are achieved to
easily or to early. Set the goals too high and you run the risk of the team not
giving a full effort for a goal that is seen as impossible to achieve.
Another aspect of goal setting that is often
overlooked is that of materiality. We have all been recipients of the dreaded
“corporate” objective. That is the overall corporate Revenue, or Profitability
goal. While this may be a suitable goal for a division or business leader, at some
point in the hierarchy it does become meaningless.
Goals are only useful if the individual that the goal
is set for as the ability to achieve or affect the achievement of that goal.
Many will argue that everyone in the corporation has the ability to affect the
achievement of the corporate goal. This is where the idea of materiality comes
in. The entry level specialists may be able to contribute to the corporate goal
achievement, but their “rating” on this objective will be largely dependent on
the work and decisions of those managers and leaders above them.
“Corporate” goals bring down the performance of your
highest performers and mask and bring up the performance of those on the lower
end of the scale. An example would be if the performance of the leader (and
team) of a higher performing smaller division, would fail to get a bonus or an
appropriate review based on not achieving a corporate “objective” because a
larger, poorer performing division brought the overall corporate performance
down.
It seems to have long been held that if the entire
corporation did not achieve their goals then no one in the corporation could be
said to have full achieved their goals. In reality in this situation there are
always those that have achieved or exceeded their goals. It is just that their
performance has been masked by another group that has not. In this case the
higher performers have been lumped in with the lower performers, with little
opportunity for financial differentiation between them.
So, as the Novocain from the
root canal wears off, and the inevitability of having to set the individual
goals for the members of the team looms large, remember; Try not to set the
goals too low or too high, and make sure that the individual can in fact
achieve, or affect the achievement of the goal. In many instances this will
mean No Corporate Goals.
Align the Goals
When we run businesses we all walk in assuming that everyone in the business is on the same page and that everyone is pursuing the same goals – namely the success of the business. My experience has shown me that this is not usually the case.
Here is a quick test to prove my point: Does everyone in the business have the same compensation and incentive structures? Most likely not. Therefore it pays to review each disciplines (Sales, Marketing, Operations, etc.) incentive structure and make sure their goals are aligned.
A case in point: The sales team is normally provided incentives (commissions) based on revenue attainment. This is good. You need to have someone responsible for attaining the business’s the top line. However, this may not be enough. In a volume only incentive plan, price becomes the sales team’s primary differentiator. The sales team will now create friction within the business trying to drive the selling price down to make it easier for them to sell. If you have a sales team that is pressing that prices are too high, you might want to look at their compensation plan as one of the possible causes for this friction. (On the other hand you also need to make sure that you are not overpriced verses the rest of the market, and if you are how you quantify the incremental product value you claim to have. I’ll look at this in later blogs.)
A solution can be to make sure that the sales team has both revenue and gross margin target goals (sales cannot affect other costs of the business as directly as price and hence should have gross margin, not earnings targets) as their objectives. Provide compensation accelerators for business above target margins (this is business that is good for everyone and should be encouraged) and compensation decelerators for business below target margins (just because it is lower margin business doesn’t mean you don’t want it, it just means it is not as valuable to the business – and hence not as valuable to the salesperson, as higher margin business).
Targeting and attaining higher margin business will help exceed earnings targets for a target revenue amount. This is a very good situation and the sales team needs to be rewarded for their part in it. Taking lower margin business means you will need more revenue to meet your earnings dollar commitments. Your sales team needs to participate in this with you as well.